Difference b/w interdealer broker and trader

[wkdwnstjdTprtm]

Hi,

I have an interview with this commodity brokerage firm that focuses on OTC markets and especially crude oils. I have a few questions.

1) What's the difference between a commodity broker at a brokerage firm and a commodity trader at, say, an investment bank commodity trading desk?

2) Is starting out career at a commodity brokerage firm good? What are some of the possible exit opportunities? Is it also going to be automated just like traders?

3) What do you guys think about the learning curve?

4) How much would you expect to earn in the first year as a junior broker?

Thanks.

 

[Joy Pathak]

commodity brokers are middle people between two traders. They facilitate flow between traders from two traders at two different investment banks.

You take no risk. It is essentially a pure sales job. You get commissions from the transactions. If you are a good salesperson then it is good.

Investment bank trader is the trader that everyone thinks of when you say 'trader'. You are a market maker...Trader... taking risk...coming up with ideas to make money yourself..and ideas and helping clients setting up positions etc.

Obviously if you have a choice... take the IB trader. It is a very stressfull life though. A Broker has no risk so the stress is only of how many traders you are getting done on your platform or voice.

A lot of brokers are automated but there is still sales angle of having a person because every brokerage has their automated system for traders to transact on but you still have to provide client coverage and client management.

 

[wkdwnstjdTprtm]

commodity brokers are middle people between two traders. They facilitate flow between traders from two traders at two different investment banks.

You take no risk. It is essentially a pure sales job. You get commissions from the transactions. If you are a good salesperson then it is good.

Investment bank trader is the trader that everyone thinks of when you say 'trader'. You are a market maker...Trader... taking risk...coming up with ideas to make money yourself..and ideas and helping clients setting up positions etc.

Obviously if you have a choice... take the IB trader. It is a very stressfull life though. A Broker has no risk so the stress is only of how many traders you are getting done on your platform or voice.

A lot of brokers are automated but there is still sales angle of having a person because every brokerage has their automated system for traders to transact on but you still have to provide client coverage and client management.

Thank you very much for your reply.

How much would you think the commodity derivatives broker would earn in the first year?

Is it possible to move from commodity broker to more quantitative and interesting role like commodity structuring at an investment bank?

 

[Joy Pathak]

No idea how much they make.

I am not sure about the move but i haven't seen many moves of that sort.

 

[Joy Pathak]

No idea how much they make.

I am not sure about the move but i haven't seen many moves of that sort.